Medibank Private Limited ABN 47 080 890 259 GPO Box 9999 in your capital city Telephone 132 331 medibank.com.au 13 November 2017 ASX release CHAIRMAN AND CHIEF EXECUTIVE OFFICER AGM PRESENTATIONS AND DIRECTOR ELECTION SPEECHES CHAIRMAN Introduction Good afternoon. My name is Elizabeth Alexander. As Chairman of the Board, I welcome all of you attending Medibank’s 2017 annual general meeting today, as well as those shareholders watching via the webcast. Acknowledgement of traditional owners I’d like to acknowledge Aboriginal and Torres S trait Islander cultures and recognise their continuing connection to the lands, waters and communities. Today we are meeting on the traditional lands of the Wurundjeri people of the Kulin nation and we pay our respects to their elders both past and present. Introductions I will now introduce you to the Medibank Board and Company Secretary, who will each stand to identify themselves On my far right is Peter Hodgett, who is the chair of our Investment and Capital Committee, followed by Dr Tracey Batten who is standing for election today. Tracey is an experienced clinician having spent more than 25 years in the health system both in Australia and overseas. Next is Linda Nicholls, the chair of our People and Remuneration Committee and next to me is our Chief Executive Officer, Craig Drummond. On my far left is David Fagan, the chair of our Risk Management Committee, followed by Christine O’Reilly, the chair of the Audit Committee and Mike Wilkins, who is standing for election today. Mike brings with him more than 30 years of experience in financial services, a strong track record in transforming culture, as well as a passion for customer service. We also have Anna Bligh, who is standing for re- election today with the Board’s full support. And finally to my left is our Company Secretary, Mei Ramsay.
Declare meeting open I now formally declare the meeting open. I also declare the poll on the resolutions open, so that any shareholders who need to leave the meeting may lodge their voting cards as they leave. Financial performance The 2017 financial year was one of significant transition. I have seen the business re-energised – which is largely due to a stronger focus on our customers. This progress has also been reflected in another good financial result for your company with an operating profit of $497.5 million from the Health Insurance business, which has helped us to pay a total full-year dividend of 12 cents per share fully franked. This represents a final payout ratio of 79%, in line with Medibank’s current policy to target an annual payout ratio of between 70% and 80% of underlying net profit after tax. Having successfully moved the Company from government ownership, 2017 afforded us the opportunity to reorient the business under the leadership of our newly appointed CEO. The business has immersed itself in looking at operational improvements, product enhancements and building a culture that is unequivocally customer led. Importantly, this focus extends to every employee, no matter what role they play. As a result, I am seeing a real shift in how the business is making decisions and how we are serving our customers and the community. Leadership in our industry Medibank has a fundamental stake in the health of Australians. Not only do we look after more than 3.7 million private health insurance customers, we also play a major role in Australia’s health system. Private health insurers fund two in every five hospital admissions in Australia. This represents 33% of all days of hospitalisation across the nation. Likewise, around 90% of day admissions for mental healthcare, 50% of all mental health admissions, 70% of joint replacements and 60% of chemotherapy takes place in the private health system. This data demonstrates how all Australians benefit from private health insurance, whether it is by taking pressure off the public health system or providing greater choice. This is a big responsibility, and one we take very seriously. We also see we have a role to play as advocate on behalf of our customers on the issues of affordability and transparency. These are all real issues for our customers, and therefore for our business. We have proactively engaged the Federal Government and political stakeholders on these issues. This includes being a strong voice in various government reviews of the health system such as the Senate Review of Private Health Insurance and the Senate Inquiry into Prostheses Prices. We welcome the Federal Government’s recent reform package which contains a range of measures designed to tackle these challenges. Some of these reforms have near-term benefits. For instance, further prostheses reform will take some pressure off premium increases from April next year. 2
Craig will talk in more detail on this next, but I will say that this reform package is a good first step. That said, affordability will continue to be top of mind for us and we will continue to work with the government to address this on behalf of our customers. Leadership in our community We also recognise our role as a corporate citizen, and the increasing expectations the community has of corporate Australia. This extends beyond meeting legal, ethical and economic responsibilities. Businesses are now in a greater position to use their influence to make a stand on issues that are important to the community. During the year we reviewed the environmental, social and governance factors, otherwise known as ESG, that are important to our stakeholders. As a health services company, we have a strong commitment to the health and wellbeing of our customers, people, community and of course the environment. We understand that the health of the environment has an impact on the health of the community. Medibank acknowledges the science of climate change and the impacts on human health. During the year we made a commitment to carbon neutrality within our direct emissions and energy consumption by the end of 2018. Our commitment also extends to our investments and we have reduced our exposure to investments that have the ability to adversely impact the health of our customers and the community. In 2016, we announced our entire investment portfolio was tobacco-free upon moving our international equities to a new tobacco-free investment fund. This was the right decision for our customers, and for our business. In line with our commitment to the health and wellbeing of our customers, Medibank has begun a process to reduce our exposure to carbon intensive assets. While Medibank does not directly invest in fossil fuels, we do have a small exposure to high carbon investments mainly through index-based equity investments. Overall, high carbon emitting companies make up less than 0.5% of our investment assets. To offset this we have invested $25 million in green bonds to support carbon-reducing and environmentally-responsible projects. As the global economy makes the transition to low-carbon emitting energy we believe it is important that our investment portfolio reflects this. As a result we will be transitioning to low carbon investments in our international investment portfolio within the next 12 months. We are also committed to exploring a similar approach within our domestic equity portfolio, and so we will be actively encouraging fund managers to develop a suitable product for us that is socially responsible, cost effective and delivers a sustainable investment return. As part of our longstanding commitment to the health and wellbeing of Australians, we invested $6.3 million in the community in the 2017 financial year. This ranged from direct community investment, health promotion, and supporting a range of community events and programs. We also continued to support reconciliation, health and medical research, and disaster relief. Our partnership with the Stephanie Alexander Kitchen Garden Foundation continued to address the issue of childhood obesity in Australia. This school-based food education program teaches Australian children positive food habits to support a lifetime of better health. During the year almost 183,000 students were estimated to have participated in the program. Due to this phenomenal reach, we have extended our partnership with the foundation to 2020. 3
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